A Comparative Study On The M&A Performance Of Listed Companies In Westwern China And Eastern China

To see about if M&A performance is related to specific regions , we make a comparative study on M&A performance in western China and eastern China by using listed companies' M&A events from Sichuan province and Shanghai as observation samples. We gather 20 M&A samples with the change of the biggest share holder from listed companies in both Sichuan and Shanghai from 1999 to 2002. By using event research methodology and financial research methodology, we conduct a comparative study on listed companies' M&A performance between Sichuan and Shanghai, and draw several conclusion:1. M&A add value to targeted company. First, targeted companies' stock price have gained positive rise around the announcement date. Second, targeted companies' financial status get better.2. stock price of targeted companies generally have gained positive cumulative average abnormal return ( CAR ) before the announcement date . but in the whole time window CAR has apparently experienced a first-up and last-down. In the background of a market segmentation and lack of effective supervision and maturity, those insiders make use of inside information and conduct inside transaction in the second market to explore excess return for making up for their paid premium cost. At the same time, we also discover CAR from Sichuan samples has a relatively small rise and shorter consistence period. This shows that the stock price of Sichuan listed companies are easier to be manipulated than that of Shanghai. This difference shows there is difference of market transparence between Shanghai and Sichuan. More importantly, this difference reveals the gap in the marketenvironment maturity and modern corporate system construction between Shanghai and Sichuan.3. This study shows that conglomerate merger can not bring a consistence to the corporate performance. Normative research find the financial index get worse in the third year. Although we don't have enough samples, we can still deem that those M&A paid little attention to conformity or they don't have enough ability to make a successful conformity.4. As to the financial state and stock CAR of the targeted companies after M&A, listed companies in Shanghai make better performance than those of Sichuan. After analyzing this similarity, we think the investors can make reasonable anticipation to guide their investment decision-making. This also shows the investors in our security market are getting more and more sophisticated and the effectiveness of our security market is improving. Therefore, the market effectiveness-growing, hidden market segmentation and investor's fancy can together satisfactorily explain the M&A performance difference in western China and eastern China...